Unlocking the Potential of Blockchain Technology

Introduction:

Welcome to the fascinating world of blockchain, a transformative technology reshaping our digital landscape.

This lesson is designed for beginners, taking you on a journey to understand blockchain’s fundamental concepts and its role as the backbone of cryptocurrencies and smart contracts.

Remember, watching the lesson video will offer a deeper understanding of this topic.

Learning Objectives:

By the end of this lesson, you will be able to:

1. Understand the basic concept of blockchain.
2. Learn how blocks are created and maintained in the blockchain.
3. Explore the various types of blockchains and their consensus mechanisms.
4. Understand the security aspects of blockchain technology.
5. Appreciate the benefits of blockchain over traditional web2 technologies.

Lesson Video:

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Understanding Blockchain:

Blockchain is a distributed ledger technology, known for its ability to maintain a secure and decentralized record of transactions.

Each ‘block’ in the chain contains several transactions, and every time a new transaction occurs on the blockchain, a record of that transaction is added to every participant’s ledger.

Creation and Maintenance of Blocks:

A blockchain accumulates information in groups, known as blocks, that hold sets of information.

Blocks have certain storage capacities and, when filled, are closed and linked to the previously filled block, forming a chain of data known as the blockchain.

New information following the freshly added block is compiled into a newly formed block, which will then also be added to the chain once filled.

Types of Blockchains By Accessibility:

There are mainly three types of blockchains:

1. Public (like Bitcoin and Ethereum, where anyone can join and participate),
2. Private (controlled by a single entity), and
3. Consortium (operated by a group of organizations).

Each Blockchain serves different purposes and offers varying degrees of decentralization and security.

Types of Blockchains By Smart Contract:

• EVM Smart Contract Blockchains: Blockchains that allow smart contracts compatible with Ethereum Virtual Machine which uses majorly Solidity programming language for smart contract development.
• Non-EVM Smart Contract Blockchains: These are not EVM compatible like Solana (Rust), Polkadot (Rust), ICP (Mokoto), Flow Blockchain (Cadence) and more. Most of these Blockchains usually have their own smart contract programming language different from Solidity.

Blockchain Consensus Mechanisms:

Consensus mechanisms are fundamental to blockchain as they ensure all the transactions are verified and agreed upon by the network participants.

The most common consensus mechanisms are Proof of Work (PoW) and Proof of Stake (PoS).

PoW requires a significant amount of computational power to validate transactions, while PoS offers a more energy-efficient alternative.

PoW Blockchain examples are Bitcoin Blockchain, Ethereum Blockchain (now moved to PoS) etc.

PoS Blockchain examples are Ethereum/EVM Blockchains, Solana, Polkadot etc.

Security in Blockchain:

Blockchain technology is lauded for its security. It uses cryptographic hashing to secure the data within the blocks.

This, along with the decentralized nature of the technology, makes the blockchain immutable and resistant to fraud and hacking.

Gas Fees and Blockchain Security:

Gas fees in blockchain act as transaction fees that users pay to miners or validators to process their transactions.

These fees help prevent spam on the network and allocate resources proportionally to the computational effort required to process transactions, enhancing network security.

Cryptocurrency – Understanding Its Relation to Blockchain:

Cryptocurrency is a digital or virtual currency that uses cryptography for security.

It operates on a blockchain and is typically decentralized, allowing for secure, peer-to-peer transactions without the need for intermediaries.

Types of Tokens on Blockchain:

1. Fungible Tokens: Interchangeable and identical in value (e.g., cryptocurrencies like Bitcoin).
2. Non-Fungible Tokens (NFTs): Unique and not interchangeable, representing ownership of specific assets (e.g., digital art, collectables).

NOTE: Native tokens of a Blockchain are usually referred to as “Coin” to differentiate them from the tokens deployed on the same Blockchain.

For example, Ethereum’s native token is “ETH” used to pay gas fees on Ethereum Blockchain. Solana Blockchain uses “SOL” and both ETH and SOL can be referred to as Coins to differentiate them from other tokens launched on their Blockchains.

Blockchain vs. Web2:

Blockchain offers significant advantages over traditional web2 technologies, including decentralization, transparency, immutability, and enhanced security.

This opens up numerous possibilities for applications in various sectors beyond just cryptocurrencies.

Types of Blockchain Developers:

You can be either of the following:

1. Core Blockchain Developer – Deals with Blockchain core development – harder to build the skill set and limited to specific Blockchain opportunities but paid the highest
2. dApp Blockchain Developer – Build dApps – easier to build the skill(like you are doing through dPU courses), unlimited opportunities but paid less than Core Blockchain developer.
3. Blockchain Security Developer – Deals with ensuring both dApp and Blockchain core protocols and platform are secured – a bit hard to build the skill. Limited opportunities but paid the next after core blockchain developer.

Conclusion:

Blockchain technology is a cornerstone of the Web3 era, offering a secure, transparent, and decentralized framework for various applications.

Understanding blockchain fundamentals, including gas fees, cryptocurrency, and token types, is crucial for navigating the evolving digital landscape.

Support:

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